The Numbers Game
There’s an old adage that says selling is purely a numbers game. The more calls you do, the more sales you make. This approach doesn’t seem to take the quality of calls into consideration, just the quantity.
I’m not sure I really believe that, but I do feel that selling is a game of numbers. Whichever approach you subscribe to, if it is a game then it would be a good idea to know the rules.
Rules of the game
Every game or sport has rules. Sometimes these rules are simply guidelines, like no loud talking when someone is teeing off in golf. Sometimes they are part of the underlying principles of the game, such as not crossing the blue line in advance of the puck. Knowing and abiding by the rules, whatever they may be, is what differentiates the amateur from the pro.
Selling has its rules as well. Unfortunately, not everyone follows the rules and sometimes that’s what gives selling and salespeople a bad name. Some of the rules of the selling game can be found embedded within the Code of Ethics published by the Canadian Professional Sales Association (CPSA) while others are simply the commonsense rules of fair play and honesty.
Let me bring this up before someone else does. Rules can be, are, and sometimes should be, broken. They are usually broken, however, at some risk. In hockey, you may get to sit out several minutes of a game while your teammates struggle on short-handed. In selling, not knowing or abiding by the rules may lose you sales, money and, at the extreme, your job.
As I mentioned earlier, if we are to consider selling a numbers game, we should know what some of those numbers are.
Know your numbers
The most fundamental number that any salesperson needs to know is his or her annual sales quota or target. This has often been called a salesperson’s “nut” and making quota was known as making your nut. Basically, it is the amount of money you have to bring into your company to pay for yourself, your expenses, marketing material, advertising, support staff, and contribution to other overhead. It’s the results of your sales efforts that pay for all these things and if you don’t make the sales, something (or someone) is going to suffer.
Often this “nut” is imposed from upon high (your sales manager or whatever) and you don’t get much say in the matter. A better approach is to have a negotiated quota where the amount satisfies the company’s need, and the salesperson takes ownership and therefore some responsibility for meeting it.
Know what it takes
Okay, so now we know how much money we need to bring in. Let’s see how that translates into sales. In order to do that you need to calculate (or estimate) the average value of a sale. The most common argument I hear from salespeople is that their prices range all over the place and they don’t have an average sale. Pooh-balls! Everyone has an average sale. Just divide your annual sales volume by the number of sales you made. It’s that simple.
For example, let’s assume my annual quota is $1,000,000 and my average sale is $10,000. (I like to keep it simple.) $1,000,000 ÷ $10,000 is 100. I have to make 100 sales to make my quota. Seems easy.
Not so fast. I don’t get every sale I start. If I have a closing ratio of 25 percent (1 in 4) that means I need 400 opportunities or prospects if I’m going to make my 100 sales.
But not everybody I talk to is a prospect or someone whom I know can use what I’m selling. Some are suspects — people whom I think may need what I’m selling. If I assume that I’m selective with whom I approach and that every second suspect will convert into a prospect, I need 800 suspects.
So now I need at least 800 suspects in order to get the 400 prospects I need to make 100 sales. At least I now know what it’s going to take to make quota.
Obviously, the better the quality of suspects and prospects you find, the smaller these numbers will be.
The important thing is that you must know your numbers and know what it takes to make your quota.
Have a plan
Carrying on with my assumptions, if I assume I will be working 50 weeks of the year, I need to make sure I find 800 ÷ 50 or 16 new suspects a week to drop into my prospecting pipeline.
But wait. Do I really have 50 full weeks to work? Not a hope. By the time I subtract holidays, sick days, meetings, trade shows, etc., I probably only have 35 to 40 weeks where I’m out there really selling. Let’s be conservative and use the 40-week number. Now I have to find 800 ÷ 40 or 20 new suspects a week (4 per day) on the average if I’m going to crack my nut.
Work your plan
If your numbers are similar and you’re working for an organization that is providing you with four or more leads a day, you’re laughing. Not laughing hard mind you, but laughing. Now your job is to convert those leads (suspects) into prospects and on to sales. That’s where your selling skills come into play, particularly your ability to qualify suspects and prospects.
On the other hand, if you are one of those salespeople who must find your own leads, this exercise will give you an idea of just how many suspects and prospects you’ll need to be a success. Not only that, you’ll have to put a plan and process in place to find those suspects and prospects.
Imagine a game where nobody kept score. How would you know who was ahead and who was behind? Not only do most games have a final score but they also keep game statistics as well such things as shots on goal in hockey or RBIs in baseball.
The final score in selling is how much you sold last year. The game statistics are closing ratios, calls per day, average quote values, number of calls made, etc. You probably know what your final score should be, but do you know your game statistics? If you don’t, it’s probably time you figured them out. Of course, there’s no need to bother unless you want to excel at the numbers game.